Saturday, November 22, 2008

When gigantic companies decide to purchase or upgrade a new enterprise resource system, the buzz usually does not just get confined inside the executive boardroom. It goes straight into the IT industry and spreads like wide fire on the internet

Burlington Northern and Santa Fe Railway (BNSF) is one of the largest networks in the United States and one of the four remaining transcontinental railroads. And when the company decided to replace its old legacy systems, the buzz instantly spread dragging with it two names. As can be expected, it dragged giant names too with the familiar question: SAP or Oracle?

According to Jeff Campbell, BNSF's vice president of technology services and chief information officer, "Both have good products, and it was a very extensive search. But for BNSF, there were some specific drivers for SAP."

With China as a rising economy comes Chinese manufacturing creating a bigger demand for transporting of goods from some ports in the US west coast going to other areas and this further translated into strong growth for the rail industry. Added to this reality are situations such as skyrocketing gas prices, aging roads and congesting highways. This growth as been affirmed by many external studies showing a potential 67 percent increase in transportation volume over the next 20 years and this is what has driven BNSF to invest in band end ERP systems whose financial and HR systems were mainframe-based almost 20 years old. .

Accordingly, the reason for choosing SAP over Oracle has ranges from total cost of ownership (TCO) and systems compatibility to other minimally measurable factors.

BNS has more than $15 billion, about 45,000 employees and has operations in 28 states and two Canadian provinces making it the second biggest railroad company in the Unite States. Every year, it transports enough coal to power one in 1 out of 10 homes in the United States.

Many have speculated that the reason for going SAP is that many other companies in the railroad industry as being serviced by SAP. According to Rod Strata, transportation and logistics industry principal for SAP, five of the seven Class 1 railroads in the U.S. are SAP customers. If one closely examines, would find out that in the railroad industry, there are very few companies one can count and with most these companies going with SAP, this is a big thing. Campbell further said: "When we looked at the long-range roadmap for future functionality and the ability to levy demands on SAP for functionality we wanted, we felt like being with SAP would align us with the majority of the industry and therefore we'd be in better stead. BNSF also felt that SAP would operate better with its existing technology products, especially IBM. SAP will play with anybody." Oracle has been on tight competition with SAP. And now that SAP is in "Duet" with Microsoft, Oracle will have to work harder. This current deal with BNSF and SAP shows the flexibility and power of SAP and how it has solutions for virtually all kinds of industries.

Tuesday, November 18, 2008

SaaS stands for Software as a service as is fast rising in popularity over the internet. As the name suggest, Saas software is not sold, meaning that customers will no buy the software or own it for free but they pay for using it. A Saas software is hosted and operated over the internet will the customers will avail of the services through an API accessible over the Web and often written using Web Services or REST

But when Oracle CEO Larry Ellison implied: "Where’s the big money in SaaS?" he caused quite a stir the ERP industry where it is in tight competition with SAP. Ellison remarked that Saas and the small to mid sized markets are very interesting for ERP vendors but not terribly profitable. And as many understood it, it was a word dismissing SAP’s Business ByDesign.

But the real puzzling thing was that Ellison owns NetSuite which is a SaaS ERP provider. Yes, when Ellison remarked about where the big money is SaaS it, he was talking about Oracle and for it to go down-market with an on-demand would mean having less profit compared to Oracle's current business model. But then if he was thinking that there was less money in SaaS ERP, then why is he owning Netsuite still?

The answer, as it was obvious to many, lies in the Oracle strategy. Oracle will not be trying to do a SAP. Ellison's move is having to let SAP figure SaaS out and it SAP become successful, Ellision would buy Netsuite for himself. In other words, if Oracle will buy Netsuite when at the right time. Sounds confusing? Yes, it does as Ellison would really be basically buying his own venture but will done with independent committee when the time comes.

Ellison's long take on the difference between Oracle and SAP strategies is: "What I’d like to highlight here is the radically different strategies of the two companies for growth. Our strategy for growth is to find a way to add more value to the same customers we already serve, which are the large end of the mid-market and large companies. What we’re doing here is moving beyond ERP to industry specific software. So in the telecommunications industry that would be billing systems and network provisioning systems and network inventory systems; core applications to run their business, to run telco, core applications to run a bank, core applications to run a retail chain of stores. core applications to run a utility. That’s our focus, and that allows us to leverage the existing relationships that we have because we already sell databases to these companies, we sell middleware to these companies. We sell ERP and CRM to these companies, and now we want to sell this industry-specific software.

It’s very different than SAP’s strategy which is to go after small companies; small companies with their new Business ByDesign, formerly known as A1S product. Now, we see the problem in that because we’ve looked at going down market. We’ve looked very closely at it, and we think it’s very hard to make money because there is no synergy. To go down market you need a new product and new product development teams. You spend a lot of money developing a whole new product for the low end. But you also need an all new sales force because we don’t call on those customers. We don’t call on small businesses, and it’s very expensive to call on small businesses. It’s very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support."

Well, there is afterall money in SaaS. Everything is just a matter of strategy.

Friday, November 14, 2008

In yesterday's blog, I mentioned about getting the hang out of ABAP. As it is a fact that SAP professionals are some of the best paid IT professionals in the world, many programmers from different disciplines are jumping into the bandwagon and discovering that coding skill alone is not enough to be a good ABAP programmer but knowing about the ins and outs of ERP is as important as having the programming skill itself.

Okay, so in yesterday's blog, I mentioned that ABAP certification is not enough. To make it clear, what I meant was, according to my friend who has been working with SAP for almost ten years in Graz, Austria, if he was the screening personnel, he would not immediately jump at hiring a person who shows an ABAP certification right in his face. He said he does not get impressed with the piece of paper. But that is from his perspective. An ABAP certification could be an indication of certain level or proficiency or certain degree of knowledge that has been achieved. But then, this knowledge may only be in theory if most highly likely, there will be a hands-on screening (and an intensive one at that) to determine the deserving candidate.

So for anybody who has jumped into ABAP from another discipline but no real life experience, what would be the best way to get started? Well, if you are not that confident with passing an intensive human resource screening, the best way may be to start with consultancy. It does not matter how the small the client is to begin with. The more small clients you handle, the more collection you have under your belt transforms into an impressive portfolio. It is not uncommon for newly trained or newly certified ABAP programming with no real life experience to have difficulty in breaking into the SAP field. ABAP in particular is very different from mainstream programming language as the applications it is designed for are already in the mold of the classic R/3 modules, BW, SEM and many others. An ABAP programmer needs to have intensive knowledge on commercial or enterprise processes. Remember what the acronym ABAP means - Advanced Business Application Programming.

So, if you are really determined to form your niche in ASAP, make good at ABAP programming. Persevere in learning deeply on commercial and business realities. Remember that SAP is one of the biggest solutions for business applications and the biggest supplier of enterprise resource planning applications. Make your code work for long term uses and ensure that they can strictly follow all business rules.

You should bear in the mind that the competition is not just between two or more programmers from different disciplines learning ABAP. Other competitors are coming from business degrees trying to learn IT and programming. So try to weigh and ask the question: is it easier for an IT guy to learn business intensively or is it easier for a business guy to learn intensive programming? Never be complacent.

In the general field of enterprise resource planning, SAP and Oracle has been on very tight competition for the last five years. Despite the very close competition, SAP has always remained number one.

But now, in the particular field of customer relationship management (CRM), SAP has meet a new and smaller but nevertheless fierce competitor in Salesforce.com

Salesforce.com has built its niche in selling of on demand customer relationship management software applications and other development platforms for enabling partners and customers to develop add-on applications which includes enterprise resource planning that can integrate with the development platform of Salesforce.com.

Similarly, SAP also plans of selling in as early as year 2008 an integrated suite of ERP and CRM software which ultilizes a a development platform for building add-on composite applications.

Both Salesforce.com and SAP are rolling out their new applications and platforms and yet they have denied any competition. But take this: During the week of September 17 when Salesforce.com unveiled Force.com as its new development platform's name in San Francisco during its Dreamforce user conference, SAP as also launching at the same times its on-demand suite Business By Design, which as the former A1S code, in New York.

SAP Deputy CEO Leo Apotheker said: "It is comparing a little hors d'oeuvre, an appetizer, and a complete three-star meal. Salesforce has a CRM application. It happens to be that the vast majority of businesses on this planet do a little more than just CRM. Our attempt is to get rid of all these acronyms. Businesses don't really buy acronyms, they buy a processes flow, a business model. We provide a complete solution and we provide a complete suite, lock stock and barrel, which is Business ByDesign] You don't need CRM from Salesforce any more. It's superfluous. No wonder Salesforce.com CEO Marc Benioff is worried. It is disconcerting. He has every right to be concerned."

The final piece of the Force.com platform will be the VisualForce which can let developers build any user interface for any application. Salesforce.com also announced that it will add two more new applications to its CRM portfolio. These two new applications will be called Content and Ideas and will be designed to appeal to a broader user base. Content will be more about Web 2.0 technologies while Ideas is move of a service for building communities where people meet and post and vote ideas. On the other hand, SAP has been dominating the ERP software industry and is not new in full ERP integration with on-demand. Although not yet available, SAP's Business ByDesign will be able to deliver suites for common back-office functions such as finance, human resources, CRM, supply chain management, supplier relationship management and corporate governance.

SAP and Salesforce.com have been reaching the midmarket with the latter more aggressively looking for inroads leading to enterprise markets. SAP, well, has of course built a niche on the enterprise markets.

Whoever wins in this battle, if ever there is a battle, will benefit two entities: the winner and the consumers.

Thursday, November 13, 2008

In my last blog, I did a comparative picture of the salaries for SAP professionals and while the salary rate varied from one SAP specialization to another, it has been shown that in general, SAP professional are earning a lot higher compared to other IT fields of specialization. It is no wonder that many programmers and IT specialists have been planning to jump into the SAP bandwagon.

But today's SAP has become more sophisticated than ever and with that comes a more powerful ABAP too. This means that programmers from other disciplines may think that just because they have mastered the basic programming constructs, learning ABAP would come as a breeze.

Getting the most out of ABAP requires a lot more than just having an knowing coding and even having an ABAP certification. ABAP works with SAP and SAP is dealing with business solutions and the business world is full of complexities greater than any non-business programmer could ever expect.

For those who want to go ABAP, and SAP professionals say advance programmers are the most preferred, understanding the complexities of enterprise resource planning (ERP) is the key. According to ABAP trainers, most people who into training were Visual Basic and Java programmers and one the basic problems they have encountered is in making them understand the complex architecture of SAP based on the three-tier design.

The three-tier client / server design is composed of the database, the applications and presentation logic. All these components are ran on three separate physical computers. Both the database and the applications components function in extracting and pushing data through the presentation logic tier.

When programmers become more and more familiar with SAP ERP, the step is focusing on the ABAP reports generation. In this step, these programmers need to have an in-depth working understanding of the ABAP dictionary which handles all of the processes pertaining to system data. Under the ABAP dictionary which is an interfaced part of the ABAP Development Workbench can be found the definitions of user all data types including the user defined types such as data elements, structures and table types. It is extremely important to know the dictionary by heart as this is the core of ABAP development where almost all the data are filtered through it.

After learning about SAP ERP and taking the ABAP dictionary by hear, the new developers must learn proficiency in performance optimization and upgrades. ERP is all about data and systems integration and it is critical to have a seamless integration of various data sources and disparate systems. As SAP is a world leader in business solutions, its ERP is top of the line with solutions for all types of industries including some in which people have never dreamed of to be possibly addressed by SAP.Constant practice makes perfect. A certification is not enough because the theory just slips away. Hands-on, like in any other fields of IT, is what makes ABAP developers master the area of ABAP language in particular and ERP implementation in general.

The world's third largest software developer Oracle is smiling cheek to cheek this month as it reported to have gained higher profit for this year's quarter compared to last year's. And just as many people in the industry have been speculating, the increase in profit has been boosted by the company's acquisition of other products. The results of the of the financial conference call was broadcast live at 2:00 p.m. (PDT) / 5:00 p.m. (EDT).

Oracle, whose specialization in software application is in business solution, reported that during this fiscal first quarter year, it has gained about $840 million which translates into 16 cents per share. In comparison, it only gained $670 million or 13 cents last year during the same period. Its revenue soared from $3.59 billion to $4.53 billion.

According to Safra Catz, Oracle President and CFO: “We reported new software license revenues up 35%, the strongest growth of any quarter in ten years. Software sales growth is translating nicely into EPS growth. We’ve now completed thirteen quarters of our five year EPS growth plan of 20% per year, and we are delivering earnings growth well ahead of that target."

Says an elated Oracle President Charles Phillips:

“We continue to take applications market share from SAP. In Q1 Oracle’s applications new license sales grew 65% compared to SAP’s new license sales growth rate of 18% in their most recently completed quarter. We like our growth strategy of expanding into high-end industry specific vertical software as opposed to SAP’s growth strategy of moving down market to sell software to small companies.

"Our Q1 database and middleware new license sales growth rate of 23% was the highest in seven years. Oracle passed IBM to become the number one database company a long time ago. If we continue to grow our middleware software business at the same rate we grew it this quarter, Oracle will challenge IBM for the number one position in middleware by the end of this year.” quipped CEO, Larry Ellison.

This year's higher earning has been greatly buoyed up the sale of some products which were in the Oracle roster last year. These added products came from Hyperion Solutions, Stellent, MetaSolv and several other software solutions vendors.Oracle now trades at about 16 times compared to the average outlook for the earnings per share of next year. This is slightly about Microsoft's 16 future price-to-earnings ratio.

Meanwhile, IBM, a technology services company and the number 2 software maker trades at 15 time earning. In terms of database technology, Oracle is still the leader ahead of IMB. In terms of business applications solution, Oracle ranks number 2 just behind Germany's SAP AG. Sap currently trades at 22 times estimated 2008 earnings. Oracle and SAP have been in constant tight competition for top spot in term so enterprise resource planning (ERP) software applications.Oracle is the world’s largest enterprise software company and innovative solutions for virtually kinds of industries.

Friday, November 7, 2008

A couple of day ago, a research revealed that Oracle has been recognized for offering high vertical specialization capabilities for small and medium sized businesses. It has become a larger trend for business solutions to target the small to mid-sized market and this is a good development because both the smaller companies can already employ affordable and high end ERP solutions while business solutions vendor can get a wide market base from this section. As SAP indicated in their website, more than 65 percent of its customers are from the small to medium sized enterprises.

Okay, so going to back to Oracles high marks, Forrester Research, a leading independent research firm recognized Oracle's contribution to smaller business with a high mark for its innovation in providing vertical specialization capabilities within the public sector, financial services, utilities, telecom, retail and wholesales industry.

The Forrester Research report was published August 13, 2007 and was entitled "Competition Intensifies for the SMB ERP Customer". There were 25 ERP vendors addressing the business requirements of SMBs reviewed by the Forrester Research analysts. As the report stated, "Oracle Accelerate "represents the centerpiece of the vendor's go-to-market SMB strategy." The report also pointed out Oracle Accelerate application "solutions catalog identifies 70 target industry segments across four product lines (i.e., Oracle E-Business Suite, Oracle's JD Edwards, Oracle's PeopleSoft and Oracle's Siebel) and 72 geographies/localizations to offer more than 20,000 possible solutions."

Tony Kender, Oracle Senior Vice President, Global SMB Business Unit Said: "We continue to hear from our SMB customers that in order to succeed, they require applications that deliver out-of-the-box, industry-specific capabilities to address their unique business requirements. We are pleased to see Forrester's study validate Oracle's strength in delivering vertical specialization capabilities across multiple industries."

Oracle Accelerate has been developed by Oracle specifically for small and medium sized businesses so that these companies, along with government entities can get comprehensive business solutions which are low-cost, low-risk, and the same time very industry specific functionalities. The main benefit to be derived from this application, aside from its very low price, is that it can provide for pre-packaged applications which can be rapidly implemented. Another important aspect of Oracle Accelerate is that Oracle has partnered this solution with Oracle Business Accelerators where smaller and mid-sized business enterprises can take advantage of easy to use templates and process flows so that customers can be made to realize immediate benefits from using the application. Other key features of Oracle Accelerate are automatic upgrading to save time from complex and risky migrating processes. It also offers integration with back office and front office processes.

For the high mark that Oracle has garnered from the Forrester Research, I say congratulations. I am sure that more innovative products will come our way especially now that Oracles has long been longing to get the top spot from SAP as the leader in ERP solutions. And with SAP not just standing by as Oracle is getting accolade, for sure more business innovations are coming from SAP too. The result is that it is the small and mid-sized enterprises getting the best of both worlds.

Recently, SAP announced that its software as a service (SaaS) ERP A1S is now called SAP Business ByDesign along with encouraging small and mid sized company to jump into the ERP bandwagon.

The SAP Business ByDesign is an ERP software has been meant to be marketed as a very affordable business solution for midsized companies with 100 - 500 employees. This solution has a starting price of $149 per month per user and the package already include the software, services and support, for companies with a minimum of 25 licensed users. Since this catered to smaller companies with limited financial resources, not everything is packaged for compulsory purchase. A company has a choice to avail of a $54 per month option for "efficiency users" who may want only a limited access and the company can choose also to buy the business solution for a set of five users only.

Says SAP CEO Henning Kagermann: "It is the most important announcement of my career I'm making today. We designed this product to create a new market for us."

Very true indeed what Kagermann is saying. The SAP Business ByDesign is by subscription model so that small and medium sized companies will not be burdened or overwhelmed with one time high price. This solution joins the like of Business One and All-in-One in SAP's small and midsized business (SMB) portfolio.

The Business One solution is an easy-to-use business management software application which has the capability of having a single system spanning all cores of business operations including e-commerce and web based customer relations manager. It designed for a company of about 100 employees or less to help it with wholesale distribution, discrete manufacturing, retail, and professional services operations.

On the other hand, the SAP All-in-One is a complete business solution with a slashed down price for smaller companies 2,500 employees. Like the SAP Business One solution, this is also an on-premise product. The SAP All-in-One is based on both SAP ERP 6.0 and SAP CRM so companies can have a fully integrated ERP software providing support for key business processes from human resource management to financials and purchasing to inventory and production. It also comes with business analytics and high end reporting tools to manage an integrated sales, marketing and service processes.As trend would show, it is not just SAP which is targeting small to mid sized businesses. Its toughest competitors Oracle and Microsoft, along with smaller others and other business solutions company mergers are into this market area. This is a wonder move as smaller companies no longer get trampled in the competition by giant companies and multinational corporations. Also, as SAP revealed in their website, there are more than 65% of all customers SAP coming from small- and midsize companies. This spells into a bright sales prospect for ERP software vendors.As for the SAP Business ByDesign, the company is today in pilot phase in countries from Germany and the United States and has on going validation in France, China and the United Kingdom.

It is just over a year since IBM announced a business solution for small and medium business (SMB) with a special price intended for easy affordability. This business solution was uniquely configured for SMB customers who have adapted to Oracle's JD Edwards EnterpriseOne applications and is specifically designed to be used for companies with at most 100 users.

The IBM System i 520 Solution Edition for Oracle's JD Edwards EnterpriseOne has been developed based on the IBM “all-in-one” System i business computing platform which ca offer a comparable acquisition cost to analogous Windows-based solutions.

The IBM System i 520 has been providing small companies with a solution that can be at par with some expensive ones with comparable configuration on Windows-based systems like Dell PowerEdge. The IBM System i has what other pricey solutions offer: database and storage features that can handle large data volumes, easy systems management, intact integration and open standards along with high built in security and virus resistance.

If in the past only large companies can afford a sophisticated system like this, things have changed. Small and medium sized companies can now implement their own program that can manage accounting, emails, supply chain and disaster recovery in with one robust application from big names like Oracle and IBM at a much lesser price.

It can still be vividly remembered what Mark Shearer, general manager of IBM System I said a year back: “SMB customers typically operate in lean environments with little or no IT personnel and limited resources. Some of these customers have previously selected Windows-based environments to support their JD Edwards applications – believing it was the most economical choice – then found themselves acting as the systems integrators for their business as they managed multiple servers and added the operating system and storage they needed to make the solution actually run. Today’s announcement removes price from the equation, giving SMBs a simpler ERP solution that requires minimal technical expertise."

The System i Solution Edition for Oracle's JD Edwards EnterpriseOne integrates both software and hardware solutions. It also comes with additional storage devices for about 100 users and include key function for business like from customer relationship management to supply chain management.

I tried to visit the IBM website and try to see what developments they have with the System i Solution Edition one year later. I specifically looked the hardware and found some interesting information. The wide array of selections include The IBM System i 515 Express, IBM System i 525 Express, IBM System i 520 Express, IBM System i 520, IBM System I 550, IBM System I 570 and IBM System I 595.

Each of these packages has its own specifications and they vary depending on the intended target. But despite all their slight variations, the point which boils down to one thing is that it can be very easy for SMBs under their budgetary limitation to implement a sophisticated ERP system.

The SAP – Oracle competition to be the top business solution in enterprise resource planning continues.

And while Oracle does its part in the competition by going on a shopping spree acquiring other software solutions companies and products, SAP is not just standing and watching. Of course we know of SAP's in-house innovations, but it does not stop at its lawn. But unlike Oracle, SAP is not acquiring, it is partnering.

A current development is SAP's partnership with Informatica to include the latter's management tools with some of the former's enterprise resource planning and analytics products. This new tie will definitely give business enterprises better tools for analyzing data stored in legacy systems (yes, it is hard to get away from legacy system with today's prohibitive costs of installing a new system) and third party systems.

Informatica Corporation is a niche owner in the field of data integration software and services for various businesses, industries and government organizations, including telecommunications, health care, insurance, and financial services while SAP, well, who does not know that is the number provider of enterprise resource management solutions?

This deal is sort of a symbiotic relationship: this will boost SAP's marketing campaign because Informatica's applications will help the company sell into larger enterprises with heterogeneous environments while Informatica can take on the exiting popularity of the SAP as an industry giant an all of its 40,000-plus installed client base. This deal will also make SAP have easier access to sales into large client accounts without having to, uhhm, bruise is ego by partnering with Oracle.

The deals includes embedding Informatica's PowerCenter, PowerExchange and Metadata Manager software into SAP's performance management and business analytic applications and the NetWeaver platform for master data management and business intelligence. The last two mentioned applications are among the fastest growing products of SAP. This growth is indicative of the trend in handling high data volumes with increased fragmentation of data sources.

For years, dealing with huge bulks of data coming from disparate data sources have posed a constant challenge for data warehousing and business intelligence systems. But this collaboration of two industry leaders can help problems related to disparate data management by correlating isolated data stores in meaningful and efficient ways. For example, manufacturers can have a better tool in correlating error rates for a particular product with batches from various raw materials suppliers. Data mining cannot do what-if analysis but the SAP – Informatica collaboration can. Another benefit to be derived is the advantage of a metadata management application which can make it easy for companies to have an audit trail of data sources and changes to the data.

While this partnership is hinted at warding off competition from SAP's closest rival Oracle, they are not the only ones in the arena of business enterprise and the many other are not just standing by cheering for either SAP or Oracle. HP is also building a similar software solution. IBM has also partnered with Oracle in coming up with yet similar products.